Table of Contents
- Introduction
- What is the One Stop Shop (OSS)?
- Benefits of the One Stop Shop
- How to Register for OSS
- What Transactions are Excluded from OSS?
- Impact on EU-Based Online Sellers
- Changes for Non-EU Online Sellers
- Steps for Submitting OSS Applications
- Frequently Asked Questions (FAQs)
- Conclusion
- FAQ Section
Introduction
In an ever-evolving e-commerce landscape, staying ahead of regulatory changes is essential for success. A significant shift occurred in July 2021 with the introduction of the One Stop Shop (OSS) regulation in the EU. This new system aims to simplify VAT compliance for online sellers. Whether you're an established business or just starting, understanding the implications of OSS could streamline your operations. This post will guide you through the key changes, registration process, and benefits for both EU and non-EU businesses.
What is the One Stop Shop (OSS)?
The One Stop Shop (OSS) is an extension of the previous Mini One Stop Shop (MOSS), originally launched to help service providers in telecommunications, broadcasting, and electronic services manage their VAT obligations. The OSS expands this framework to include all distance sales of goods within the EU and certain domestic supplies facilitated by electronic interfaces. Additionally, the Import One Stop Shop (IOSS) was introduced for low-value goods imported from outside the EU.
Benefits of the One Stop Shop
Streamlined VAT Compliance
The OSS simplifies VAT filing by allowing businesses selling across multiple EU countries to file a single VAT return in their home country. This streamlined process reduces the need for multiple VAT registrations in each country where sales occur, substantially cutting down administrative burdens.
Unified Reporting
With OSS, companies no longer need to adhere to different VAT return deadlines and formats across various EU countries. A single OSS VAT return per period is required, simplifying the reporting process.
How to Register for OSS
Registration Process
Registration for OSS is conducted via the Federal Central Tax Office (BZSt) online portal. Here are the essential steps:
- Access the BZSt Online Portal: Log in using your certificate file.
- Complete the Registration Notice: Find the "Registration notice for participation in the OSS EU regulation" under "Forms and Services" and fill in your details.
- Submission and Confirmation: After submission, BZSt will confirm your registration in writing.
It's advisable to consult your tax advisor during the registration to ensure accuracy. Early registration is recommended to avoid delays.
Key Points to Remember
- Registration must be completed by the end of a quarter to use OSS in the following quarter.
- Ensure all required data is accurately entered to avoid complications.
What Transactions are Excluded from OSS?
While OSS covers most B2C cross-border sales, some transactions still require separate reporting:
- Domestic Sales: Must be reported through the standard VAT return in each country.
- Business-to-Business (B2B) Sales: Not included in OSS and must follow standard VAT reporting.
- Imports and Purchases: Continue to be reported through the usual VAT return methods.
Impact on EU-Based Online Sellers
Abolition of Distance Sales Thresholds
One of the most significant changes with OSS is the elimination of the old distance sales thresholds. The new system introduces a single EU-wide threshold of €10,000 for all distance sales.
Storage and VAT Registration
EU companies storing goods in multiple EU countries must still register for VAT in each country where storage occurs. However, for companies storing goods only in their home country and selling to other EU countries, only the OSS VAT return is necessary.
Example Case Studies
Alpha Services: A German company storing goods only in Germany and selling to France, Italy, and Spain will not need to register for VAT in these countries under the OSS system.
Beta Products: A German company storing goods in Germany, France, Italy, and Spain must register for VAT in all four countries, but OSS can streamline their VAT return process for distance sales.
Changes for Non-EU Online Sellers
Abolition of Distance Sales Thresholds
Non-EU sellers now face the elimination of individual country thresholds for distance sales. Like EU-based companies, they must adhere to the single EU-wide threshold.
VAT Registration and Storage
Non-EU sellers storing goods in the EU must register for VAT in each country where storage occurs. Domestic sales continue to be reported through the standard VAT return methods.
Example Case Studies
Delta Limited: A non-EU company selling through Amazon UK and storing goods in the UK will require a VAT number in the UK. Sales to Italy, France, and Spain through Amazon will be managed via the OSS system.
Epsilon Ltd: A non-EU seller storing goods in the UK and France will need VAT numbers in both countries. Sales to Italy and Spain can be reported through OSS without additional VAT registrations.
Steps for Submitting OSS Applications
Manual Submission in Q3 2021
During the initial rollout, OSS returns must be manually submitted through the BZSt portal, as digital uploads and interfaces are not yet implemented. Sellers must provide detailed information about their sales, categorized by product type, destination country, and VAT rates.
Data Requirements and Sorting
- Separate sales of services from product sales.
- Distinguish between sales to German and foreign customers.
- Categorize sales by country and applicable VAT rates.
Seeking Professional Assistance
Given the complexity, using a specialized tax advisor can simplify the OSS registration and reporting process. Advisors can automate data separation, ensure data quality, and manage OSS advance notifications.
Frequently Asked Questions (FAQs)
Do I still need to register for VAT in multiple countries? Yes, if you store goods in multiple countries, you must register for VAT in each of those countries. OSS simplifies the reporting for cross-border sales but doesn't eliminate the need for multiple VAT registrations.
Are all sales reported in the OSS return? No, only cross-border B2C sales are included. Domestic sales and B2B transactions require separate reporting.
How can I register for OSS? Registration can be done through the BZSt online portal. Early registration ensures timely use of the OSS system.
Can non-EU businesses use OSS reporting? Yes, non-EU businesses can choose an EU country to register for OSS, provided they have a standard VAT registration there.
Is OSS reporting mandatory? No, using OSS is optional. Businesses can continue with standard reporting but may face higher administrative costs.
Conclusion
The OSS regulation is a significant step towards simplifying VAT compliance for online sellers in the EU. By understanding and leveraging OSS, businesses can streamline their operations, reduce administrative burdens, and focus on growth. Whether you're an EU-based or non-EU seller, staying informed and prepared is crucial for navigating these changes and ensuring compliance.
FAQ Section
Do I need more than one registration after OSS? You will need VAT registrations in your home country or nominated EU country if you're a non-EU business, as well as in all EU countries where you store goods.
Will I need to report all my sales in the OSS report? No, only cross-border B2C sales are included in the OSS report.
What about domestic sales? Domestic sales must be reported separately through the standard VAT return in each applicable country.
How to register for OSS? Registration can be done via the BZSt online portal, with early registration recommended to avoid delays.
Who can file my OSS report? Anyone with registered authorization can file the OSS report. In some countries, this may be limited to licensed accountants or tax advisors.
Can I deregister my VAT ID in countries where I don't store goods? Yes, once registered for OSS, you can deregister VAT IDs in countries where you no longer store goods.
Is OSS reporting better than regular reporting? OSS reporting is often more cost-effective as it reduces the need for multiple VAT registrations and simplifies compliance.
By understanding these changes and adapting your business practices accordingly, you can ensure seamless compliance with the new OSS regulation, allowing you to focus on expanding your e-commerce business throughout the EU.
